The persistently high inflation levels are weighing on consumers’ confidence in the United States. The growing supply-chain disturbances emanating from the ongoing Russia-Ukraine war crisis and the resurging COVID-19 cases in China might trigger concerns over further rising inflation levels.

The Conference Board's measure of consumer confidence index stands at 107.3 in April 2022 versus 107.6 in March. Moreover, April’s reading missed the consensus estimate of 108, per a Reuters survey of economists. Also, the metric continues to be below the pre-pandemic level of 132.6 achieved in February 2020.

The Present Situation Index, which gauges consumer views on current business and labor market conditions, declined to 152.6 in April from 153.8 last month. The Expectations Index, which measures consumers’ short-term (for the next six months) outlook for income, business and labor market conditions, rose to 77.2 from 76.7.

The disappointing consumer confidence reading might affect the consumer discretionary sector, which attracts a major portion of consumer spending amid rising inflation levels. Certain ETFs that can feel the impact are The Consumer Discretionary Select Sector SPDR Fund (XLY Quick QuoteXLY - Free Report) , Vanguard Consumer Discretionary ETF (VCR Quick QuoteVCR - Free Report) , First Trust Consumer Discretionary AlphaDEX Fund (FXD Quick QuoteFXD - Free Report) and Fidelity MSCI Consumer Discretionary Index ETF (FDIS Quick QuoteFDIS - Free Report) .

Commenting on the data, Lynn Franco, Senior Director of Economic Indicators at The Conference Board, reportedly said, “Consumer confidence fell slightly in April, after a modest increase in March. The Present Situation Index declined, but remains quite high, suggesting the economy continued to expand in early Q2. Expectations, while still weak, did not deteriorate further amid high prices, especially at the gas pump, and the war in Ukraine. Vacation intentions cooled but intentions to buy big-ticket items like automobiles and many appliances rose somewhat.”

Lynn Franco also believes that rising interest levels have been adding to the consumers' concerns and hurting purchase plans. Although there has been some easing in worries regarding inflation levels from March, Americans will continue to be bothered by the Russia-Ukraine war. Consumer spending might also be impacted if the inflation levels remain high.

Meanwhile, the preliminary consumer sentiment readings rose for early April mainly due to the strengthening job market. The University of Michigan’s preliminary consumer sentiment rose to 65.7 in early April from a final reading of 59.4 last month, improving 10.6% over the prior month.

ETFs to Keep Track Of

Here we discuss in detail the four most popular funds that target the broader consumer discretionary sector (see all Consumer Discretionary ETFs):

The Consumer Discretionary Select Sector SPDR Fund (XLY Quick QuoteXLY - Free Report)

The Consumer Discretionary Select Sector SPDR Fund is the largest and the most popular product in the consumer discretionary space, with AUM of $18.07 billion. XLY tracks the Consumer Discretionary Select Sector Index.

The Consumer Discretionary Select Sector SPDR Fund charges an expense ratio of 0.10%. XLY carries a Zacks ETF Rank #2 (Buy), with a Medium-risk outlook. Also, The Consumer Discretionary Select Sector SPDR Fund trades in a three-month average volume of 11.4 million shares (read: Amazon Posts Slowest Sales Growth in 2 Decades: ETFs in Focus).

Vanguard Consumer Discretionary ETF (VCR Quick QuoteVCR - Free Report)

Vanguard Consumer Discretionary ETF currently follows the MSCI US Investable Market Consumer Discretionary 25/50 Index.

Vanguard Consumer Discretionary ETF has AUM of $5.59 billion and charges an expense ratio of 0.10%. VCR carries a Zacks ETF Rank #2, with a Medium-risk outlook. Also, Vanguard Consumer Discretionary ETF trades in a three-month average volume of about 131,000 shares.

First Trust Consumer Discretionary AlphaDEX Fund (FXD Quick QuoteFXD - Free Report)

First Trust Consumer Discretionary AlphaDEX Fund tracks the StrataQuant Consumer Discretionary Index, employing the AlphaDEX stock-selection methodology to select stocks from the Russell 1000 Index.

First Trust Consumer Discretionary AlphaDEX Fund has AUM of $611.7 million. FXD charges 0.61% of annual fees and has a Zacks ETF Rank #3 (Hold), with a Medium-risk outlook. Also, First Trust Consumer Discretionary AlphaDEX Fund trades in a three-month average volume of about 568,000 shares.

Fidelity MSCI Consumer Discretionary Index ETF (FDIS Quick QuoteFDIS - Free Report)

Fidelity MSCI Consumer Discretionary Index ETF tracks the MSCI USA IMI Consumer Discretionary Index.

Fidelity MSCI Consumer Discretionary Index ETF amassed $1.34 billion in its asset base. FDIS charges 8 basis points as annual fees from investors and carries a Zacks ETF Rank #2, with a Medium-risk outlook. Fidelity MSCI Consumer Discretionary Index ETF trades in a three-month average volume of about 133,000 shares (read: Another Banner Quarter for Tesla: ETFs to Buy).